Leverage and Margin in Coin-Margined Futures Contracts

Binance uses a sophisticated risk control system and liquidation model to support high-leverage trading by adopting the Maintenance Margin model. For the latest updates, please refer to the Leverage & Margin page.

Important note: Effective July 27, 2021, Binance Futures introduced leverage limits for users with registered futures accounts of less than 3 days. The following leverage limits apply:

From the effective date, new users with registered futures accounts of less than 3 days will not be allowed to open positions with leverage exceeding 20x.

The new leverage limits will also apply to existing users with registered futures accounts of less than 3 days:

• Users with open positions of less than 20x leverage will not be allowed to adjust their open positions beyond 20x leverage.
• Users with open positions of more than 20x leverage may choose to maintain their position leverage but will not be allowed to increase their position leverage further. They will only be allowed to deleverage their open positions to 20x and below.

For new users with no open positions, all new positions must not exceed 20x leverage. Leverage limits for new users will gradually increase only after 3 days from registration.

All leverage and margin tiers of Coin-Margined futures contracts can be accessed via the Leverage & Margin page.

Initial Margin Rate

The maximum amount of leverage available for users depends on the notional value of their position. Generally, the larger the position, the lower the leverage allowed. Thus, initial margin deposits are calculated using the leverage selected by the trader.

Please note:

• In Cross Margin Mode, the margin can only be shared with the same type of asset. For example, all BTC in the COIN-M Futures Wallet can be used for all BTC based contracts (including perpetual and delivery) in Cross Margin Mode.
• Initial Margin Rate = 1 / Leverage
• The trader will first select their leverage (and fulfill its initial margin requirement) before opening their positions. If the trader does not select the leverage, it will be set at 20x by default. The higher the leverage, the smaller the notional size the trader will have access to. The lower the leverage, the higher the notional size the trader can open. The system will display the maximum allowable position size at different tiers of leverage as shown below.

Maintenance Margin Rate

Maintenance margin calculations are done via a “Tax Bracket” setup. This means that the maintenance margin is always calculated the same way, regardless of what leverage the trader selects. Moving from one bracket to another will not cause the earlier bracket to change its leverage. Again, as noted earlier, it is highly recommended for the trader to liquidate positions before the collateral falls below the Maintenance Margin to avoid auto-liquidation.

Cost Required to Open a Position

Traders should ensure that they have the minimum required amount of funds in their wallet before opening a position. The cost required to open a position includes the Initial Margin and open loss (if any). Open loss occurs when the order price is unfavorable to the traders, i.e., Mark Price is lower than the order price for a long order. Binance includes open loss as one of the costs required to open a position to avoid forced liquidation when the traders place the order. If open loss is not counted, there is a high probability that users’ position will get liquidated immediately once they have placed such orders.

Cost = Initial Margin + Open Loss (if any)

Step 1: Calculate initial margin

Initial Margin

= Notional Value / Leverage Level

= [ (10*100 USD) / 9,800 USD ] / 20

= 0.0051 BTC

Step 2: Calculate Open Loss

Open Loss = Number of Contract x Contract Multiplier x Absolute Value {min[0, direction of order x (1 / order price - 1 /mark price)]}

*direction of order: 1 for long order；-1 for short order

Open loss of long order

= 10 x 100 USD x Absolute Value {min[0, 1 x (1 / 9,800 USD - 1 / 9,602.6 USD)]}

= 0.002097646 BTC

Open loss of short order

= 10 x 100 USD x Absolute Value {min[0, 1 x (1 / 9,800 USD - 1 / 9,602.6 USD)]}

= 0

Step 3: Calculate the cost required to open a position

Since the long order has open loss, thus the cost required to open a long position is higher as we need to take open loss into consideration besides the initial margin.

Cost Required to Open a Long Position

= 0.0051 BTC + 0.002096562 BTC

= 0.0072 BTC (difference due to rounding off)

Short order has no open loss, thus the cost required to open a short position is equivalent to the initial margin.

Cost Required to Open a Short Position

= 0.0051 BTC + 0 = 0.0051 BTC

*Disclaimer: The numbers in this article are subject to change without further notice. Please refer to the English version for the most updated numbers.